Macroeconomics Beyond the NAIRU

Storm, Servaas; Naastepad, C.W.M.

doi:10.4159/harvard.9780674063242

Cited by 118 publications

(138 citation statements)

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“…It may therefore be more plausible that household savings rise, because relatively lower returns to labor incentivize them to increase self-protection. The shrinking of public welfare to make room for market liberalization may well have the same effect, as suggested in the literature (Storm and Naastepad 2012). Yet, this reason is incompatible with the joint report's optimistic projection of rising average household income in Canada and the EU.…”

Section: Ad Hoc Methodology Fabricating 'Dynamic' Gains From 'Lisupporting

confidence: 57%

CETA without Blinders: How Cutting “Trade Costs and More” Will Cause Unemployment, Inequality, and Welfare Losses

Storm

Kohler

2016

International Journal of Political Economy

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Proponents of the Comprehensive Economic and Trade Agreement (CETA) emphasize its prospective economic benefits, with economic growth increasing due to rising trade volumes and investment. Widely cited official projections suggest modest GDP gains after about a decade, varying from between 0.003% to 0.08% in the European Union and between 0.03% to 0.76% in Canada. However, all these quantitative projections stem from the same trade model, which assumes full employment and neutral (if not constant) income distribution in all countries, excluding from the outset any of the major risks of deeper liberalization. This lack of intellectual diversity and of realism shrouding the debate around CETA's alleged economic benefits calls for an alternative assessment grounded in more realistic modeling premises.In this paper, we provide alternative projections of CETA's economic effects using the United Nations Global Policy Model (GPM). Allowing for changes in employment and income distribution, we obtain very different results. In contrast to positive outcomes projected with full-employment models, we find CETA will lead to intra-EU trade diversion. More importantly, in the current context of tepid economic growth, competitive pressures induced by CETA will cause unemployment, inequality and welfare losses. At a minimum, this shows that official studies do not offer a solid basis for an informed decision on CETA. AcknowledgementsWe would like to thank Alex Izurieta for suggestions on how to best apply the Global Policy Model and for commenting on earlier drafts, as well as Jeronim Capaldo,

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Section: Ad Hoc Methodology Fabricating 'Dynamic' Gains From 'Lisupporting

confidence: 57%

CETA without Blinders: How Cutting “Trade Costs and More” Will Cause Unemployment, Inequality, and Welfare Losses

Storm

Kohler

2016

International Journal of Political Economy

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“…While space restrictions only allow for a cursory overview (see Baccaro and Pontusson, 2016 for a more extensive treatment), suffice it to say that in Neo-Kaleckian macroeconomics output and employment are primarily determined by aggregate demand as opposed to supply-side conditions, and aggregate demand is, in turn, a function of distribution (Bhaduri and Marglin, 1990;Onaran and Galanis, 2012;Storm and Naastepad, 2012;Stockhammer, 2015). This last element is very important for the argument of this article because it establishes a relationship between the social forces and the institutions shaping distributive outcomes and macroeconomic dynamics.…”

Section: A Shifting Growth Model?mentioning

confidence: 99%

“…Against this background, a recent study by Storm and Naastepad (2015) is interesting because it embraces the classic VoC argument about the sources of German export success and seeks to provide empirical support for it (see also Storm and Naastepad, 2012). Storm and Naastepad argue forcefully that the recent German export success has nothing to do with any wage or cost compression and everything to do with Germany's superior non-price competitiveness, which in turn is determined by the 'distinctly non-neoliberal dimensions of Germany's economic model' (Storm and Naastepad, 2015, p. 12).…”

Section: The Price-elasticity Of German Exportsmentioning

confidence: 99%

Throwing out the ballast: growth models and the liberalization of German industrial relations

Baccaro

Benassi

2016

Socioecon Rev

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This article proposes a new interpretation of the evolution of German industrial relations focusing on the interaction between macroeconomic dynamics and industrial relations developments and specifically on 'growth models'. It argues that there has been a shift in the German growth model from growth pulled by net exports and consumption simultaneously to almost exclusively export-led growth. In addition, exports of machinery and transportation equipment have become more pricesensitive, implying that wage and price increases now pose a greater threat to growth than in the past. These macroeconomic developments have spurred a set of adjustments in the industrial relations sphere with export-oriented firms seeking cost reductions and liberalizations. Industrial relations changes have in turn contributed to entrench export-led growth by augmenting the systemic importance of the foreign sector and reducing the relevance of domestic demand. The export sector has thrived at the expense of real wage stagnation, particularly (but not exclusively) in labour-intensive service sectors, and pattern bargaining has lost its ability to redistribute across sectors and boost domestic demand. The new German model is much leaner and meaner than in the past. Contrary to recent literature, its erosion and liberalization are not limited to the service periphery but affect the manufacturing core as well.Key words: Germany, industrial relations, institutional change, varieties of capitalism, growth models JEL classification: P16 political economy, E02 institutions and the macroeconomy, J52 collective bargaining

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“…Some authors, in the Kaldor-Verdoorn tradition, have done so by taking into account the influence of economic growth on labour productivity. Storm and Naastepad (2012) give evidence that, because of this influence, temporary shocks will influence the long-run equilibrium-which amounts to the demise of the NAIRU order. Another way to introduce path-dependency into consideration is to use linear models of hysteresis (Cassetti, 2006;Chang and Su, 2014;Cheng et al, 2012;Schoder, 2012), or to introduce exogenous structural changes during the traverse (see Lavoie, 1996).…”

Section: Introductionmentioning

confidence: 97%

Investment hysteresis and potential output: A post-Keynesian–Kaleckian agent-based approach

Bassi

Lang

2016

Economic Modelling

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Macroeconomics Beyond the NAIRU

Cited by 118 publications

References 0 publications

CETA without Blinders: How Cutting “Trade Costs and More” Will Cause Unemployment, Inequality, and Welfare Losses

CETA without Blinders: How Cutting “Trade Costs and More” Will Cause Unemployment, Inequality, and Welfare Losses

Throwing out the ballast: growth models and the liberalization of German industrial relations

Investment hysteresis and potential output: A post-Keynesian–Kaleckian agent-based approach

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